Macroeconomics Theory and Policy (ECO202)

Macroeconomics Theory and Policy (ECO202)
2018 – 2019
Writing Assignment
Total: 100 marks.
The purpose of this assignment is to estimate the Phillips curve and Okun¡¦s Law for the country of your
choice and write a well-structured research report about the whole process of acquiring and refining your
date, estimating, interpreting the coefficients, and discussing the theoretical background of your models and
empirical implications of the estimated equations for the country of your study.
In order to help you, your article should include, among other things, following steps. Please note that your
final paper must have a complete structure from introduction to conclusion and references with an internal
coherence. These steps are just to help you to organize your paper, and not to be treated like questions to
get your answer mechanically.
In order to find help for writing, referencing methods, avoiding plagiarism, please consult with following
websites:
http://www.writing.utoronto.ca/advice/using-sources
http://www.writing.utoronto.ca/advice/
1- Choose a period time not shorter than 20 years and as recent as possible. For each year, find the
following time series data for your country from reputable sources: Inflation rate, unemployment rate, and
real GDP (in terms of local currency). A description of the used data sources should be included.
(15 points)
2- Present the data in form of tables and graphs that you think are informative for your audience. Discuss
the sources of your data, nature of the data and the assumptions that you may use to construct the needed
data. (10 points)
3- You can use LINEST function in MS Excel spreadsheet to estimate a and b coefficients in a different
version of the Philips Curve in an equation like this (Note: instead of unemployment we have real output in
this version of Phillips curve, so b must turn out to be positive, not negative)
t t 1 t ƒà ƒ{ ƒà ƒ­ a ƒy b Y ƒ{
– If you have problem working with LINEST function, search YOUTUBE, for the tutorials. You can learn
it within a few minutes, using the tutorials and my example file.
– To see one example of using LINEST function for estimations, check the posted example on the portal.
– All estimated coefficients and statistics should be fully presented. The computer output of the estimation
should be included. (15 points)
4- Using algebra, change the estimated equation in to standard Phillips Curve like below to find £\ and
natural level of output for your country (Note that I used Y instead of u in this version of the Philips Curve):
ƒvY Yƒw t t 1 t ƒà ƒ{ ƒà ƒ­ ƒÑ ƒ{ ƒ{
Discuss the size and sign of these values. Discuss the statistics of the model, like R2. (15 points)
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5- In this part you should estimate the Okun¡¦s Law by estimating an equation like this:
t t 1 yt u ƒ{ u ƒ­ a ƒy b g ƒ{
Where, gyt is the growth rate of real GDP. All estimated coefficients and statistics should be fully presented.
The computer output of the estimation should be included. (15 points)
6- Change the estimated equation in to standard Okun¡¦s Law like below to find £] and g, which is called
normal growth rate: u u ƒvg gƒw t t 1 yt ƒ{ ƒ­ ƒ{ƒÒ ƒ{ ƒ{ .
Discuss the size and sign of these values. Discuss the statistics of the model, like R2. (10 points)
7- General organization, quality of presentation, creativity and elaboration of the paper and also proper
referencing: (20 points)
Administrative issues:
– The project should be done by each of you independently. You should let me know following
information by email, by Feb. 24, 2019:
– Your name and student ID Number.
– A list of six or seven countries from the next page list, in order of your preference. I will choose
and let you know the country of your group. You cannot change your country, after my approval.
Countries will be assigned on the first come first serve basis. So, in order to get your first choice
you need to act fast.
– The quality of analysis always matters more than quantity. But your assignment could be around 2000
words (excluding the references).
– You should report all your references. As you know plagiarism is a violation that is prosecuted based on
the university rules. In suspicious cases, I may decide to check your assignments by Turnitin.
– The assignment must be submitted before March 24, at 6pm, sharp, through Quercus. The assignment
must include the names and student ID Numbers, on the cover page, otherwise your marks may not
recorded correctly. The details of submission will be announced later on.
– The deadline will not be extended. No excuse like network failure or system interruption ¡K is acceptable.
If you miss this project, it cannot be substituted by anything else.
-The only acceptable submission format is ONE file in PDF format, with following name. Marks will be
deducted if the rules are not followed.
ECO202_Country_lastname_Student#.pdf
For example for Nigeria: ECO202 _Nigeria_Jones_123456789.pdf
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– The file must be sent only once. If you send several versions or several times, one of them is selected,
RANDOMELY, by the computer.
If you don¡¦t follow these rules, your file Will Not Be Graded.
– The deadline will not be extended. No excuse like network failure or system interruption ¡K is acceptable.
If you miss the project, it cannot be substituted by anything else.
List of Countries
A: Algeria, Argentina, Armenia, Azerbaijan
B: Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Burkina Faso
C: Cambodia, Cameroon, Chile, Colombia, Congo, Costa Rica, Cote d¡¦Ivoire
D: Dominican Republic
E: Ecuador, Egypt, El Salvador, Ethiopia
G: Gabon, Ghana, Guatemala
H: Honduras
I: India, Indonesia, Iran, Israel
J: Jamaica, Jordan
K: Kenya, Korea
L: Lebanon, Lesotho, Libya
M: Madagascar, Malawi, Malaysia, Mali, Mexico, Morocco, Mozambique, Myanmar
N: Namibia, Nepal, Nicaragua, Niger, Nigeria
P: Pakistan, Panama, Paraguay, Peru, Philippines
S: Senegal, Singapore, South Africa, Sri Lanka, Sudan, Syria
T: Thailand, Tunisia, Turkey, Tanzania
U: Uganda, Uruguay
V: Venezuela, Vietnam
Z: Zambia, Zimbabwe